Appreciation is when the value of an asset you own increases. This usually applies to assets such as property and land.

It's important to know how much your business is worth. This includes the value of the assets you hold.

When an asset appreciates in value, you need to record this in your accounts. This is to make sure the value of your assets is correct in your accounts. You should do this at regular intervals, using journals.

Before you start

Step one is to create new Ledger accounts to record the value of the appreciation

Create a ledger account for appreciation

Create a new ledger account to record the increase in value of your assets. This appears in the Equity section of your chart of accounts.

1. From Settings, choose Business Settings.
2. In the Financial Settings section, choose Chart of Accounts.

3. Select New Ledger Account and complete the following:

   • Ledger Name and Display Name. Enter an appropriate name such as Appreciation

   • Nominal Code. Enter a code for the ledger account. If you're using our default chart of accounts, we recommend 3001

   • Category. Choose Equity

   • VAT Rate. Choose No VAT

4. Select Save.

Create a ledger account for the appreciated value of the asset (optional)

Create a new ledger account if you want to track the accumulated value separately from the initial value of the asset.

1. From Settings, choose Business Settings.
2. In the Financial Settings section, choose Chart of Accounts.

3. Select New Ledger Account and complete the following:

   • Ledger Name and Display Name. Enter an appropriate name such as Property Appreciation

   • Nominal Code. Enter a code for the ledger account, such as 0012

   • Category. Choose EquityVAT Rate.

   • Choose No VAT

4. Select Save.

Record appreciation journals

When an asset increases in value, enter a journal to show the increased value.

Remember a journal must always have equal debit and credit values.

In our example, we have an appreciated value of £5000.

1. From Journals, choose New Journal.
2. Enter the reference, date, and description if required.

3. Enter debits and credits in the following way:

   Ledger Account	Debit	Credit	Include on VAT return
   Building appreciation (0012)	5000	0.00	Leave clear
   Appreciation (3001)	0.00	5000	Leave clear

4. Select Save.

You’ve successfully recorded the appreciation which increases the value of your asset.